I’ve spent the last couple of days with Nokia here in Stuttgart and have had some really interesting conversations.  What is clear from these meetings, and from the official announcements at Nokia World, is that Nokia is wholeheartedly committed to its services strategy.  They’re learning their way, but Nokia is a company that prides itself on renewal and they’re keen students of the lessons of their marketplace experiences.  It is easy to see that Nokia’s Ovi strategy has much more focus and clear vision than 2 years ago and that focus will continue to sharpen.


Music is the spearhead of Nokia’s Ovi strategy, and Comes With Music is the key element of their music play.  Regular readers will know that I’m a fan of CWM, and I consider it to be one of the best tools that the music industry has to fight piracy with.  Unlike Spotify, CWM enables users to take their music with them on their portable device and to keep it forever.  Those are strong assets for pulling kids off file sharing networks.  But it’s no secret that CWM hasn’t set the world alight yet, even if it has had better uptake in emerging markets than developed markets.  Some have used this as evidence of why the CWM model is flawed.  I don’t agree.  CWM’s slow start has been due to a combination of:


  • At launch, unclear positioning and marketing that undersold the value proposition.
  • Too disruptive to mobile operators to encourage many operators to support CWM
  • Weak consumer understanding of the value proposition


To Nokia’s credit, all of those are now being addressed.  There is now a stronger story for operators, as evidence by the fact that 20 operators now carry CWM across 9 markets.  If enough meat is in the game for operators (i.e. strong revenue sharing) CWM is actually a strong value proposition for operators: they get to have music differentiation, data plan adoption, subscriber retention, music revenue, but no hefty upfront investments in their own (often poorly differentiated) music services.


It’s interesting to compare the positioning of Spotify with CWM.  Spotify spent little on above the line marketing, but the marketplace has clear understanding that it is an unlimited free music service.  Nokia invested heavily on marketing but the marketplace understanding is much less clear.  Few understand that CWM is also a free unlimited music service.  (OK, the cost is hidden in the device cost, but it feels like free to consumers).


Nokia played it too safe when launching CWM – they should have been bolder and called a spade a spade.  Of course there were a number of good reasons why they didn't, but now the time is right for a bolder play.  Consumers (and the media) still think there’s a catch with CWM.  There isn’t.  Nokia need to simplify and clarify the CWM message: it is unlimited, free, portable music that you own for ever.


There are a couple of interesting dynamics that Nokia will need to face up too over the coming years.  Outside of the UK CWM has a stronger story to tell, with a solid start in emerging markets such as Mexico. This raises the intriguing possibility of Nokia becoming the dominant digital music provider for emerging markets even if they are less successful in developed markets.  The other issue is that the music industry is increasingly heading towards supporting household music services (e.g. Sky, Virgin Media) which raises questions about where Nokia’s individual-focused music strategy fits.  Should Nokia make a play for household solutions?  Should they hone their offering to explicitly coexist with household services?  Or should they just carry on without change? Each alternative has its respective merits and risks.


All in all I am confident that Nokia will continue to make solid progress over the coming years. The launch of new great new CWM exclusive music handsets such as the X6 and X3 will be strong drivers of adoption.  But it’s not realistic to expect rapid success.  CWM is an entirely new value proposition.  It will take time for consumers and channel partners alike to become comfortable and familiar with it.  Back in September last year I wrote a report stating that the CWM has great value, but that it will take time to take hold.  That advice remains as true one year on.